Nickel price jumps up, aluminum production too low for demand

by David Fleschen

Yesterday, for once, not zinc, aluminum or copper attracted attention, but nickel. On the LME, the price rose by 4.5% and continues to rise this morning to USD 21,400 per ton. This is the highest level in almost 7½ years. On the SHFE, nickel is up over 7% today to a record high of the equivalent of over USD 25,000 per ton. Supply concerns are behind the price jump. Yesterday, two of the world's largest nickel producers reported significantly lower nickel production for the last quarter and revised their production forecast for the full year downwards. In addition, nickel production in the Philippines is being affected by bad weather and logistics problems. In addition, the Indonesian government is again thinking louder about extending the export freeze to more raw materials and semi-processed products in the foreseeable future or taxing exports higher.

The aluminum price has already started to recover its previous losses during the day yesterday. This morning it is again rising above USD 3,100 per ton. Global aluminum production did rise 1.8% year-on-year in September to 5.51 million tons, or 183.6 thousand tons per day, according to data from the International Aluminium Institute (IAI). On a monthly basis, however, this is the lowest level since February. The decline in production in recent months is likely to be primarily due to the energy shortage in China, in the wake of which key provinces have ordered production cuts and rationed electricity supplies. Extrapolated for the year as a whole, global aluminum production is still on course for a record, benefiting from high output in the first half of the year. However, production is apparently insufficient to meet demand. The latter is recovering from its Corona-related slump last year and, according to data from the World Bureau of Metal Statistics (WBMS), rose by more than 9% in the first eight months of the year compared with the corresponding period of the previous year. Demand growth was almost twice as high as supply expansion. As a result, WBMS shows a supply deficit of just over 1 million tons for the global aluminum market in its observation period. At the same time last year, the market was still oversupplied by several hundred thousand tons.

Source: Commerzbank Research, Photo: Fotolia

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